After a somewhat rocky start, Samvat 2072 has ended on a positive note with the benchmark Sensex having rallied a little over 8%. That might be less than the average annual return of 14.5% in the last 10 years but it’s better than the loss of 4% in Samvat 2071. The year also saw the resurgence of the primary market with 24 new firms making their debut on Dalal Street — ICIC Prudential Life Insurance mopped up a whopping Rs 6,050 crore, the biggest IPO in nearly six years.

Interestingly, at just $5.7 billion, Samvat 2072 saw FPI inflows at their lowest levels in the last five years. Domestic institutional investors too didn’t really shop much investing close to R23,000 crore or about $3.42 billion. The Sensex lost 11% in the first three months, hitting a bottom on Budget day, but made a smart comeback to rally over 20% in the rest of the year.

The strong upmove has left the markets expensive. At its close of 27,941.51 points on Friday, the Sensex now trades at 18.8 times estimated FY17 earnings and at a price to earnings (PE) multiple of 15.6 times estimated FY18 earnings. Historically, Indian markets have traded at a one-year forward PE ratio of around 15 times. While the strong macroeconomic fundamentals — low inflation, low current account deficit — as also the potential for relatively high growth in the next couple of years could see the market continuing to trade a premium to historic multiples, earnings growth too would need to be stronger. The 20% growth in earnings estimated for FY18, while impressive, comes off a low base.

In Samvat 2072, the rally was led by oil and gas and metals stocks, which had been beaten down; the BSE Metals index is up nearly 50% while the BSE Oil & Gas has gained a little over 40%. Stocks such as Vedanta, which saw its shares more than double during the year, and JSW Steel , which notched up gains of 96%, Tata Steel and Hindalco Industries. which put on 89%, were among the big gainers.

Within the oil and gas space, both upstream and downstream companies registered strong gains; the former were helped by the stability in crude oil prices while improved refining margins boosted profits at refiners and marketers. Carmakers, NBFCs and a few consumer staples firms became the darlings of investors; salary hikes following the recommendations of the Seventh Pay Commission, stable input prices and falling interest rates were among factors that helped.

The laggards of Samvat 2072 were IT stocks — the BSE IT index gave up 9.4%, followed by BSE Teck, which lost 7.5%. IT stocks reported very ordinary numbers for the three months to September with Infosys paring its dollar revenue guidance for FY17. The sector faces global headwinds in the form of structural changes and the fallout of events such as Brexit. The telecom space is seeing heightened competition with the entry of a deep-pocketed player in Reliance Jio. Moreover, revenues from the data segment have not been growing at the anticipated pace despite price cuts.

“A strong pick-up in earnings and a return to double-digit growth in revenues for corporate India is crucial for markets to move on a sustainable basis,” said Dharmesh Kant, head, retail research at Motilal Oswal Financial Services.